BetterWorks lost employees and customers to a sexual-harassment scandal — here's how its new CEO plans to win them back

Doug Dennerline, a veteran of Cisco and Salesforce, recently took the CEO role at BetterWorks.

BetterWorks, a human-resources software company, replaced its founding CEO, Kris Duggan, after a lawsuit in June accused him of sexually harassing an employee and fostering an inhospitable culture.

Now Dennerline is tasked with moving the company forward and convincing employees and customers alike that he can correct the course of the troubled startup.

To start, BetterWorks is focusing on diversity-and-inclusion training for employees, who have also gotten new perks like paternity leave, Dennerline says.

Doug Dennerline has spent most of the past 30 years as a tech executive and CEO, but this week he took on what could prove one of the most challenging roles of his career.

Wednesday was Dennerline's first day as the CEO of BetterWorks, a human-resources software company that has seen employee and customer attrition since a lawsuit in June accused his predecessor, Kris Duggan, of fostering an inhospitable work environment and sexually harassing an employee.

A handful of executives have left BetterWorks since then, including the chief marketing officer and the vice president of engineering — departures stemming from the effect of the allegations on the company and its culture, Dennerline says. About half a dozen human-resources customers also stopped doing business with the company, fearful of associating with BetterWorks as it navigated the controversy.

But Dennerline and his team have taken steps to set things right. While Duggan remains on the BetterWorks board, he no longer comes to the office, Dennerline says. And BetterWorks has adjusted its corporate culture and code of conduct — for instance, employees are now limited to a maximum of two drinks at company events.

With those changes coming into place, it's now up to Dennerline to convince employees and customers alike that his leadership represents a new chapter for the scandal-ridden startup.

Dennerline, who joined BetterWorks as its chairman in October, has spent the past few months attending management meetings and figuring out what's going on at the company.

He talked with Business Insider the morning of his first day as CEO. Here's how he plans to take the company forward.

This interview has been edited and condensed for clarity.

Becky Peterson: What's your first task now that you've started your new role?

Doug Dennerline: One of the first things that we're doing is that I'm going to spend 30 minutes with every single employee here in the next four weeks. I actually feel like I have a relatively good idea of the product roadmap and the people in the organization.

It's just a matter of being able to set up a cadence — I call it a rhythm — for the business. We even spent some time when I was a chairman to put in place a business plan for this year.

And I've been actively looking into some key personnel that I want to bring into the organization. I hired a woman that I worked with at WebEx when I was the CEO of WebEx internally at Cisco; she's now our chief marketing officer. We're now looking for a VP of engineering as another key hire. And we have some wonderful candidates in that space as well.

It's kind of business as usual coming in and being here and running the company.

Peterson: Were those roles left unfilled after Kris Duggan stepped down as CEO?

Dennerline: They were. Kris stepped down the day after I started, and the marketing person left about two days later. The VP of engineering left the post the announcement.

The company started an 'open mic' and unconscious-bias training

Peterson: You mentioned that you've started hosting an "open mic" where employees can ask questions to management. Can you give me a sense of how as a company you're trying to address cultural issues? How do you see the problem?

Dennerline: I don't even know that there is a problem at this point. People that couldn't get over personally in their hearts the impact of the event have largely left the organization. The culture — these guys have really attacked this problem head-on. They've done diversity-and-inclusion groups. Lots of conversations around what that means.

We did a formal training where were brought an outside firm in to bring us through unconscious-bias training. We put every employee through that training.

We're very transparent about anybody who has a question. We address that publicly.

And then there's the fact that when you go through a situation like this, you really do become hyperaware of your person and how you show up and how you treat people. I believe that is a side benefit, if there is one, for having gone through a traumatic event like this company has had.

Peterson: I know Kris is still on the board. How do you think employees feel about him still being connected to the company?

Dennerline: I think they're mixed. He's got such a non-visible role that I don't think it's really impactful for anybody. He literally doesn't come. We don't even have the board meetings in the office — we do it at the office of our investors, Kleiner Perkins. So he's really nonexistent for anybody. There's no interaction with employees. So it's as if he's gone.

We don't even have the board meetings in the office — we do it at the office of our investors, Kleiner Perkins. So [Kris is] really nonexistent for anybody. There's no interaction with employees. So it's as if he's gone.

Peterson: Let's talk about the future of the company. You said that there were some clients that were dropped. How are you positioning yourself to new customers, and how are you winning them back?

Dennerline: I've spoken with two or three who were contemplating whether to move forward or not, and there was no CEO — they didn't know how to deal with that.

I met with them personally and let them know that I was on as chairman and my intention was to come on as CEO, and that we had taken this very seriously. And I told them about the things we're doing internally so that we could do everything in our power so that nothing like this would happen again.

Peterson: Do you think that the half a dozen companies that did end up leaving were more concerned about being associated with the company, or do you think they were upset about the content of the two lawsuits?

Dennerline: I don't really know, to be honest. I'm sure they all had different reasons. I spoke to two of them that went away. They just said they felt, for their roles, to be associated with a company that had been accused of harassment wasn't reflective of a company you want to do business with, and they parted ways.

Employees are now restricted to 2 drinks at work events

Peterson: You said you've made changes to make sure it won't happen again. Can you give me a sense of what those changes are?

Dennerline: It's the education, the knowledge. It's the individuals learning about what sexual harassment is and what harassment in the workplace is. They want it to go away as much as anyone else.

We weren't a harassment culture to begin with, so it's not like there was some dramatic change that had to occur internally. But having gone through this, they've seen the devastation of what it causes to lives and to people and to companies, and I think everybody here has learned from that and are behaving in a way that we want them to behave.

Now, I can't ever guarantee that someone doesn't harass somebody. All of us in the leadership team are hyperaware of making sure we keep an eye out for that. And we will continue to do that.

Peterson: Have you made any of the changes that some other companies have made, like eliminating alcohol from work events and things like that?

Dennerline: We actually didn't have any statement in our code of conduct in regard to alcohol. We now do.

We actually didn't have any statement in our code of conduct in regard to alcohol. We now do.

We basically will offer you two drink tickets at a company-sponsored event for you to have two cocktails. We also tell people if for whatever reason you end up with more than two cocktails that you find a ride home, and don't get behind a wheel of a car, and get home safely.

We also added what we thought were more progressive benefits for an HR company, like paternity leave and others. We want to lead the way as well.

Peterson: So it's not just about sexual harassment — you're trying to reduce sexism in general?

Dennerline: Completely. It's all about diversity inclusion.

Peterson: Did race come up as well as an issue at the company?

Dennerline: Currently in the company it has not.

Business was hurt, but nothing 'devastating' happened financially

Peterson: On the business side, do you have any goals as a new CEO?

Dennerline: Well, it is Day One. We did actually go off-site with the management team and put some goals in place for the organization that were just rolling out. I haven't rolled them out, so I'd rather not share them until the people internally get to look at those. But they're pillars around growth, retention of our customers, direction of the product, and diversity inclusion being a core value in the company.

Peterson: Do you see the last few months as having any impact on financials?

Dennerline: From a revenue and a bookings perspective, we were off slightly on the plan that we put in place prior to the event, but it certainly has not been devastating or instrumental, so that's been encouraging.

Even prior to me getting here, they made a strategic decision to change directions a bit.

The company was formed on a goals-only application that we used fondly internally as OKRs: objective and key results. It's really the reason that John Doerr is so passionate about the company, because he worked for Andy Grove, who is the father of that term in Silicon Valley. And John has taught that term to Google, to Amazon.com. He's passionate about the impact that's had on companies.

"We get confused with Fitbit if you look at our brand today in terms of the icon next to it," Doug Dennerline said about the BetterWorks logo.
Collage/Business Insider

What we've added to that in the last year and a half was the notion of continuous performance management. The annual performance review is a broken process. HR people hate it. The managers hate it. The people that get a performance review hate it. We're changing that so that we create an opportunity for managers and employees to not only have a conversation about what their goals are, but what their personal aspirations are as well. We have a conversation capability inside the application — a peer feedback. We have a recognition wall. It's much more social than traditional performance management.

Peterson: In terms of the company brand, do you think that BetterWorks will be able to recover from this, or is there any conversation about rebranding?

Dennerline: We certainly had a conversation around that. We actually hired a company I've used in my past called WHM, who I respect. They're doing some work for us right now to inform us by talking to employees, customers, people that aren't our customers anymore, analysts about what is the perception of BetterWorks in the market, and inform a decision that potentially could rebrand.

I actually don't think that renaming is the direction we will head. We don't want people to perceive that we're trying to cover something up. That's not what we want to accomplish.

We get confused with Fitbit if you look at our brand today in terms of the icon next to it. So we probably will rebrand, but we probably won't rename. I'm waiting to be informed through data.